Travelers 2005 Annual Report Download - page 217

THE ST. PAUL TRAVELERS COMPANIES, INC.AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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17. CONTINGENCIES, COMMITMENTS AND GUARANTEES
To date, the Company has found only a few instances of conduct that were inconsistent with the
Company’s employee code of conduct. The Company has responded, and will continue to respond,
appropriately to any such conduct.
The Company’s internal review with respect to finite reinsurance considered finite products the
Company both purchased and sold. The Company has completed its review with respect to the identified
finite products purchased and sold, and has concluded that no adjustment to previously issued financial
statements is required. The related industry-wide investigations previously described are ongoing, as are
the Company’s efforts to cooperate with the authorities, and the various authorities could ask that
additional work be performed or reach conclusions different from the Company’s.Accordingly, it would be
premature to reach any conclusions as to the likely outcome of these matters.
Six putative class action lawsuits and two individual actions were brought against a number of
insurance brokers and insurers, including the Company and/or certain of its affiliates, by plaintiffs who
allegedly purchased insurance products through one or more of the defendant brokers. Plaintiffs allege
that various insurance brokers conspired with each other and with various insurers, including the Company
and/or certain of its affiliates, to artificially inflate premiums, allocate brokerage customers and rig bids for
insurance products offered to those customers. Five of the class actions were filed in federal district court,
and the complaints are captioned: Shell Vacations LLC v. Marsh & McLennanCompanies, Inc., et al. (N.D.
Ill. Jan. 14, 2005), Redwood Oil Company v. Marsh & McLennan Companies, Inc. , et al. (N.D. Ill. Jan.21,
2005), Boros v. Marsh & McLennan Companies, Inc., et al. (N.D. Cal. Feb. 4,2005), Mulcahey v. Arthur J.
Gallagher & Co., et al. (D.N.J. Feb.23, 2005) andGolden Gate Bridge, Highway, and Transportation
District v. Marsh & McLennan Companies, Inc., et al. (D.N.J. Feb. 23, 2005). The plaintiff in one of the five
actions, Shell Vacations LLC, later voluntarily dismissed its complaint. To the extent they were not
originally filed there, the federal class actions were transferred by the Judicial Panel on Multidistrict
Litigation to the United States District Court for the District of New Jersey and have been consolidated
with other class actions under the caption In re Insurance Brokerage Antitrust Litigation, a multidistrict
litigation proceeding in that District. On August 1, 2005, nineteen plaintiffs, including the four named
plaintiffs in the above-referenced class actions, filed an amended consolidated class action complaint
naming various brokers and insurers, including the Company and certain of its affiliates, on behalf of a
putative nationwide class of policyholders. The complaint includes causes of action under the Sherman
Act, the Racketeer Influenced and Corrupt Organizations Act, state common law and the laws of the
various states prohibiting antitrust violations. Plaintiffs seek monetary damages, including punitive
damages and trebled damages, permanent injunctive relief, restitution, including disgorgement of profits,
interest and costs, including attorneys’ fees. On November 29, 2005, all defendants moved to dismiss the
complaint for failure to state a claim. On February 13, 2006, the named plaintiffs moved to certify a
nationwide class consistingof all persons who between August 26, 1994, and the date of class certification
engaged the services of a broker defendant (or related entity) in connection with the procurement or
renewal of insurance and who entered into or renewed a contract of insurance with one or more of the
insurer defendants, including the Company. One individual action naming variousbrokers and insurers,
including several of the Company’s affiliates, was filed in federal district court and is captioned Delta Pride
Catfish, Inc. v. Marsh USA, Inc., et al. (D. Miss. Sept. 13, 2005). That action has also been transferred to the
District of New Jersey and is being coordinated with In re Insurance Brokerage Antitrust Litigation. On
January 17, 2006, all defendants moved to dismiss the complaint inDelta Pride Catfish, Inc. for failure to
state a claim. One other putative class action, Bensley Construction, Inc. v. Marsh & McLennan
(Continued)